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The short answer
If you are UK resident, interest paid on your dollar domiciliary account in Nigeria is foreign savings income: you convert each payment into pounds at the exchange rate when it was paid and report it on the SA106 foreign pages of Self Assessment, with any Nigerian tax deducted shown separately for credit. The dollar balance itself is not taxed as a currency gain when you spend or move it, because HMRC treats an individual's foreign-currency bank account as a debt with no chargeable gain for the original account holder.
Many Nigerians in the UK keep a dom account at home in dollars: savings from before they left, money for a future project, or a buffer against the naira. Some of these accounts pay interest. Because the amounts are often small and paid in dollars into a Nigerian bank, they are easy to forget on a UK tax return. They still count.
Why the UK taxes it
GOV.UK says UK residents normally pay UK tax on foreign income, including foreign interest, and usually report it through Self Assessment. The exception is the foreign income and gains regime for people in their first four years of UK residence after ten years abroad; LITRG explains that a claim is made on the return and that claiming costs you your personal allowance for that year. Before 6 April 2025 domicile mattered; it no longer does. See the four-year FIG regime for new arrivals.
Converting dollar interest to pounds
HMRC's SA106 notes say to convert foreign income using the exchange rate at the time the income arose, and link to HMRC's published exchange rates. For an account that pays interest once a year, that means the dollar-to-pound rate on the payment date. For monthly or quarterly interest, convert each payment, or ask HMRC whether an average rate is acceptable for your case; the notes we read do not settle that point. The same method applies to naira interest; see declaring naira bank interest.
Worked example (illustrative)
| Dollars | Example rate | Pounds | |
|---|---|---|---|
| Interest credited, 31 Dec | $240 | $1 = £0.75 | £180 |
| Nigerian tax deducted (example) | $24 | $1 = £0.75 | £18 |
| Net received | $216 | £162 |
Example: you enter £180 of foreign interest and £18 of foreign tax on the SA106. Check the bank statement for the tax actually deducted; do not assume a rate. Under Article 11 of the UK-Nigeria treaty, Nigeria's tax on interest paid to a UK resident is capped at 12.5% of the gross. If more than that was deducted, raise it with the bank before you file.
On the SA106
- Column A: the country code. The SA106 notes give 'NGA' for Nigeria.
- Column B: the interest in pounds before foreign tax.
- Column C: the foreign tax taken off.
- Column E: an X if you are claiming foreign tax credit relief.
- Column F: the taxable amount (the full gross if you claim the credit).
Foreign tax credit relief cannot be more than the UK tax on the same income, and it cannot be combined with a FIG claim, according to the notes. For a full walk-through of the pages, see SA106 foreign pages for Nigerian income.
The savings allowance
GOV.UK sets the Personal Savings Allowance at £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and nothing for additional-rate taxpayers, with a starting rate for savings of up to £5,000 where other income is low. Your return's calculation applies the allowances to your savings income in total. Small foreign interest may therefore produce no UK tax, but it still needs to be on the return if you file one.
Is the dollar balance itself taxed?
Not as a currency gain on the account. HMRC's Capital Gains Manual (CG78300 and the pages under it) says that since 6 April 2012 foreign-currency bank accounts held by individuals are treated as simple debts, so no chargeable gain or loss arises for the original account holder when money is withdrawn. Foreign currency held as cash is different, and HMRC's manual has its own rules for it; see UK CGT on currency gains.
Situations readers ask about
The account pays no interest
Then there is nothing to report for that account. Many dom accounts are current accounts with no interest at all; check the statement rather than assuming either way.
Interest is paid but you never moved the money to the UK
It still counts. LITRG notes that the FIG regime replaced the remittance basis from 6 April 2025, so a UK resident's foreign interest is taxed whether or not it is brought to the UK, unless a FIG claim covers it.
A fixed deposit in dollars
Interest on a dollar fixed deposit is still interest. Record it when it is paid or credited to you, and convert it at that date's rate. If a term deposit rolls over and interest is added to the principal, the credit date is the one to use.
A joint account with a parent in Nigeria
Report only your share of the interest. Keep a note of how the account is held and who put the money in, because that is how the share is worked out.
What to keep
- The Nigerian bank's annual statement showing each interest credit and any tax deducted.
- The exchange rate for each payment date and its source.
- Your SA106 workings for each tax year (6 April to 5 April), not the Nigerian calendar year.
- Any correspondence if the bank deducted tax above the treaty rate.
Questions people ask
Do I pay UK tax on interest from my Nigerian dom account?
If you are UK resident and not using the FIG regime, yes. It is foreign interest and goes on the SA106 foreign pages, after conversion to pounds.
Which exchange rate do I use for dollar interest?
HMRC's SA106 notes say to use the rate at the time the income arose, with a link to HMRC's published rates.
Is there CGT when I move dollars out of my dom account?
HMRC treats an individual's foreign-currency bank account as a debt, so no chargeable gain arises for the original holder on withdrawals.
Does my Personal Savings Allowance cover foreign interest?
Your return's calculation applies the savings allowances to your savings income in total, so small amounts may be tax-free, but you still report them.
Sources
- GOV.UK: Tax on foreign income · accessed Oct 2026
- HMRC: SA106 Foreign notes 2026 · accessed Oct 2026
- GOV.UK: UK-Nigeria Double Taxation Convention (signed 9 Jun 1987) · accessed Oct 2026
- GOV.UK: Tax on savings interest, how much is tax free (updated 30 Sep 2026) · accessed Oct 2026
- HMRC Capital Gains Manual CG78300: foreign currency (updated 22 Oct 2026) · accessed Oct 2026
- LITRG: Foreign income and gains regime, 2025/26 onwards (updated 6 Apr 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.